FIRST DIVISION

IN RE: PETITION FOR G.R. No. 149615

SEPARATION OF PROPERTY

ELENA BUENAVENTURA MULLER,

Petitioner, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
HELMUT MULLER,
Respondent. Promulgated:

August 29, 2006

x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.:

This petition for review on certiorari[1] assails the February 26, 2001 Decision[2] of
the Court of Appeals in CA-G.R. CV No. 59321 affirming with modification the
August 12, 1996 Decision[3] of the Regional Trial Court of Quezon City, Branch 86
in Civil Case No. Q-94-21862, which terminated the regime of absolute
community of property between petitioner and respondent, as well as the
Resolution[4] dated August 13, 2001 denying the motion for reconsideration.

The facts are as follows:

Petitioner Elena Buenaventura Muller and respondent Helmut Muller were married
in Hamburg, Germany on September 22, 1989. The couple resided in Germany at a
house owned by respondents parents but decided to move and reside permanently
in the Philippines in 1992. By this time, respondent had inherited the house
in Germany from his parents which he sold and used the proceeds for the purchase
of a parcel of land in Antipolo, Rizal at the cost of P528,000.00 and the
construction of a house amounting to P2,300,000.00. The Antipolo property was
registered in the name of petitioner under Transfer Certificate of Title No.
219438[5] of the Register of Deeds of Marikina, Metro Manila.

Due to incompatibilities and respondents alleged womanizing, drinking, and

maltreatment, the spouses eventually separated. On September 26, 1994,
respondent filed a petition[6] for separation of properties before the Regional Trial
Court of Quezon City.

On August 12, 1996, the trial court rendered a decision which terminated the
regime of absolute community of property between the petitioner and
respondent. It also decreed the separation of properties between them and ordered
the equal partition of personal properties located within the country, excluding
those acquired by gratuitous title during the marriage. With regard to the Antipolo
property, the court held that it was acquired using paraphernal funds of the
respondent. However, it ruled that respondent cannot recover his funds because the
property was purchased in violation of Section 7, Article XII of the
Constitution. Thus

However, pursuant to Article 92 of the Family Code, properties

acquired by gratuitous title by either spouse during the marriage shall be
excluded from the community property. The real property, therefore,
inherited by petitioner in Germany is excluded from the absolute
community of property of the herein spouses. Necessarily, the proceeds
of the sale of said real property as well as the personal properties
purchased thereby, belong exclusively to the petitioner. However, the
 part of that inheritance used by the petitioner for acquiring the house and
lot in this country cannot be recovered by the petitioner, its acquisition
being a violation of Section 7, Article XII of the Constitution which
provides that save in cases of hereditary succession, no private lands
shall be transferred or conveyed except to individuals, corporations or
associations qualified to acquire or hold lands of the public domain. The
law will leave the parties in the situation where they are in without
prejudice to a voluntary partition by the parties of the said real property.
xxx

xxxx

As regards the property covered by Transfer Certificate of Title

No. 219438 of the Registry of Deeds of Marikina, Metro Manila,
situated in Antipolo, Rizal and the improvements thereon, the Court shall
not make any pronouncement on constitutional grounds.[7]

Respondent appealed to the Court of Appeals which rendered the assailed

decision modifying the trial courts Decision. It held that respondent merely prayed
for reimbursement for the purchase of the Antipolo property, and not acquisition or
transfer of ownership to him. It also considered petitioners ownership over the
property in trust for the respondent. As regards the house, the Court of Appeals
ruled that there is nothing in the Constitution which prohibits respondent from
acquiring the same. The dispositive portion of the assailed decision reads:

WHEREFORE, in view of the foregoing, the Decision of the

lower court dated August 12, 1996 is hereby MODIFIED. Respondent
Elena Buenaventura Muller is hereby ordered to REIMBURSE the
petitioner the amount of P528,000.00 for the acquisition of the land and
the amount of P2,300,000.00 for the construction of the house situated in
Atnipolo, Rizal, deducting therefrom the amount respondent spent for
the preservation, maintenance and development of the aforesaid real
property including the depreciation cost of the house or in the alternative
to SELL the house and lot in the event respondent does not have the
means to reimburse the petitioner out of her own money and from the
proceeds thereof, reimburse the petitioner of the cost of the land and the
house deducting the expenses for its maintenance and preservation spent
by the respondent. Should there be profit, the same shall be divided in
 proportion to the equity each has over the property. The case is
REMANDED to the lower court for reception of evidence as to the
amount claimed by the respondents for the preservation and maintenance
of the property.

SO ORDERED.[8]

Hence, the instant petition for review raising the following issues:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

HOLDING THAT THE RESPONDENT HEREIN IS ENTITLED TO
REIMBURSEMENT OF THE AMOUNT USED TO PURCHASE THE
LAND AS WELL AS THE COSTS FOR THE CONSTRUCTION OF
THE HOUSE, FOR IN SO RULING, IT INDIRECTLY ALLOWED
AN ACT DONE WHICH OTHERWISE COULD NOT BE DIRECTLY
x x x DONE, WITHOUT DOING VIOLENCE TO THE
CONSTITUTIONAL PROSCRIPTION THAT AN ALIEN IS
PROHIBITED FROM ACQUIRING OWNERSHIP OF REAL
PROPERTIES LOCATED IN THE PHILIPPINES.

II

THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING

RESPONDENTS CAUSE OF ACTION WHICH IS ACTUALLY A
DESPERATE ATTEMPT TO OBTAIN OWNERSHIP OVER
THE LOT IN QUESTION, CLOTHED UNDER THE GUISE OF
CLAIMING REIMBURSEMENT.

Petitioner contends that respondent, being an alien, is disqualified to own

private lands in the Philippines; that respondent was aware of the constitutional
prohibition but circumvented the same; and that respondents purpose for filing an
action for separation of property is to obtain exclusive possession, control and
disposition of the Antipolo property.
 Respondent claims that he is not praying for transfer of ownership of the
Antipolo property but merely reimbursement; that the funds paid by him for the
said property were in consideration of his marriage to petitioner; that the funds
were given to petitioner in trust; and that equity demands that respondent should be
reimbursed of his personal funds.

The issue for resolution is whether respondent is entitled to reimbursement

of the funds used for the acquisition of the Antipolo property.

The petition has merit.

Section 7, Article XII of the 1987 Constitution states:

Save in cases of hereditary succession, no private lands shall be

transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.

Aliens, whether individuals or corporations, are disqualified from acquiring

lands of the public domain. Hence, they are also disqualified from acquiring
private lands.[9]The primary purpose of the constitutional provision is the
conservation of the national patrimony. In the case of Krivenko v. Register of
Deeds,[10] the Court held:

Under section 1 of Article XIII of the Constitution, natural

resources, with the exception of public agricultural land, shall not be
alienated, and with respect to public agricultural lands, their alienation is
limited to Filipino citizens. But this constitutional purpose conserving
agricultural resources in the hands of Filipino citizens may easily be
defeated by the Filipino citizens themselves who may alienate their
agricultural lands in favor of aliens. It is partly to prevent this result that
section 5 is included in Article XIII, and it reads as follows:

Sec. 5. Save in cases of hereditary succession, no private

agricultural land will be transferred or assigned except to individuals,
 corporations, or associations qualified to acquire or hold lands of the
public domain in the Philippines.

This constitutional provision closes the only remaining avenue

through which agricultural resources may leak into aliens hands. It
would certainly be futile to prohibit the alienation of public agricultural
lands to aliens if, after all, they may be freely so alienated upon their
becoming private agricultural lands in the hands of Filipino citizens. x x
x

xxxx

If the term private agricultural lands is to be construed as not

including residential lots or lands not strictly agricultural, the result
would be that aliens may freely acquire and possess not only residential
lots and houses for themselves but entire subdivisions, and whole towns
and cities, and that they may validly buy and hold in their names lands of
any area for building homes, factories, industrial plants, fisheries,
hatcheries, schools, health and vacation resorts, markets, golf courses,
playgrounds, airfields, and a host of other uses and purposes that are not,
in appellants words, strictly agricultural. (Solicitor Generals Brief, p. 6.)
That this is obnoxious to the conservative spirit of the Constitution is
beyond question.

Respondent was aware of the constitutional prohibition and expressly

admitted his knowledge thereof to this Court.[11] He declared that he had the
Antipolo property titled in the name of petitioner because of the said
prohibition.[12] His attempt at subsequently asserting or claiming a right on the said
property cannot be sustained.

The Court of Appeals erred in holding that an implied trust was created and
resulted by operation of law in view of petitioners marriage to respondent. Save for
the exception provided in cases of hereditary succession, respondents
disqualification from owning lands in the Philippines is absolute. Not even an
ownership in trust is allowed.Besides, where the purchase is made in violation of
an existing statute and in evasion of its express provision, no trust can result in
favor of the party who is guilty of the fraud. [13] To hold otherwise would allow
circumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but also a court
of equity, is likewise misplaced. It has been held that equity as a rule will follow
the law and will not permit that to be done indirectly which, because of public
policy, cannot be done directly.[14] He who seeks equity must do equity, and he
who comes into equity must come with clean hands. The latter is a frequently
stated maxim which is also expressed in the principle that he who has done
inequity shall not have equity. It signifies that a litigant may be denied relief by a
court of equity on the ground that his conduct has been inequitable, unfair and
dishonest, or fraudulent, or deceitful as to the controversy in issue.[15]

Thus, in the instant case, respondent cannot seek reimbursement on the

ground of equity where it is clear that he willingly and knowingly bought the
property despite the constitutional prohibition.

Further, the distinction made between transfer of ownership as opposed to

recovery of funds is a futile exercise on respondents part. To allow reimbursement
would in effect permit respondent to enjoy the fruits of a property which he is not
allowed to own. Thus, it is likewise proscribed by law. As expressly held
in Cheesman v. Intermediate Appellate Court:[16]

Finally, the fundamental law prohibits the sale to aliens of

residential land. Section 14, Article XIV of the 1973 Constitution
ordains that, Save in cases of hereditary succession, no private land shall
be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public
domain. Petitioner Thomas Cheesman was, of course, charged with
knowledge of this prohibition. Thus, assuming that it was his intention
that the lot in question be purchased by him and his wife, he acquired no
right whatever over the property by virtue of that purchase; and in
attempting to acquire a right or interest in land, vicariously and
 clandestinely, he knowingly violated the Constitution; the sale as to him
was null and void. In any event, he had and has no capacity or
personality to question the subsequent sale of the same property by his
wife on the theory that in so doing he is merely exercising the
prerogative of a husband in respect of conjugal property. To sustain such
a theory would permit indirect controversion of the constitutional
prohibition. If the property were to be declared conjugal, this would
accord to the alien husband a not insubstantial interest and right over
land, as he would then have a decisive vote as to its transfer or
disposition. This is a right that the Constitution does not permit him to
have.

As already observed, the finding that his wife had used her own
money to purchase the property cannot, and will not, at this stage of the
proceedings be reviewed and overturned. But even if it were a fact that
said wife had used conjugal funds to make the acquisition, the
considerations just set out to militate, on high constitutional
grounds, against his recovering and holding the property so
acquired, or any part thereof. And whether in such an event, he may
recover from his wife any share of the money used for the purchase
or charge her with unauthorized disposition or expenditure of
conjugal funds is not now inquired into; that would be, in the
premises, a purely academic exercise. (Emphasis added)

WHEREFORE, in view of the foregoing, the instant petition

is GRANTED. The Decision dated February 26, 2001 of the Court of Appeals in
CA-G.R. CV No. 59321 ordering petitioner Elena Buenaventura Muller to
reimburse respondent Helmut Muller the amount of P528,000 for the acquisition of
the land and the amount of P2,300,000 for the construction of the house in
Antipolo City, and the Resolution dated August 13, 2001 denying reconsideration
thereof, are REVERSED and SET ASIDE. The August 12, 1996 Decision of the
Regional Trial Court of Quezon City, Branch 86 in Civil Case No. Q-94-21862
terminating the regime of absolute community between the petitioner and
respondent, decreeing a separation of property between them and ordering the
partition of the personal properties located in the Philippines equally,
is REINSTATED.
SO ORDERED.